- U.S. stocks ticked higher after economic data from Europe came in better than forecast
- European government bond yields also rose across the board on expectations of a rate cut by the European Central Bank
- the Italian 10-year yield rose to 0.916% from 0.885% Friday. The German 10-year bund was yielding minus 0.606%, up from minus 0.634% at the end of last week
You have got to be kidding.
Two questions.
With German 10-year bond yield trending toward a minus 1% yield, exactly how far can the European Central Bank cut rates? LOL. And Trump blames the Chinese for currency manipulation. LOL.
Exactly what is the difference between 0.606% and 0.634%?
Remember, when calculating with "%" -- move the decimal over two places .... so ...
- $100,000 x 0.00606 = $606.
- $100,000 x 0.00634 = $634.
Of you can buy ATT (T) which pays almost 6%. Every year, with dividend increases likely and capital appreciation almost guaranteed (over ten years). $6,000 x 10 years = $60,000, and, of course, one can take that $6,000/year and re-invest.
Einstein: strongest force in the universe -- compound interest.
What am I missing?
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what you might be missing is that certain institutions, like banks and govt pension funds, have to own a certain % of AAA debt by law or mandate, forcing them into those negative rate bonds...other than that, you seem to have it about right, it's crazy..
ReplyDeleteAnother reason why this is not an investment site. I was vaguely familiar with that requirement but certainly did not remember it. Thank you for noting that and taking time to write. I guess I was coming from the vantage point of the "mom and pop" investor, sort of like my dad.
Deletei wasn't being critical, i was just trying to answer your last question, "What am I missing?"
Deletei am figuring we will soon see negative rates in the US soon, too; the incentive for the government to start earning interest on all that debt is too great to miss out on...
but if your dad owns long Treasuries, remember they'll go up in value as rates go down..
Oh, I knew you were not being critical. I think I'm pretty easy-going except when it comes to the Bakken. I take that very, very seriously. I learn a lot from readers. No, Dad, to the best of my knowledge was always interested only in shares of common stock, never bonds or preferred shares/stock.
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